RBA sets up for May

Posted by

The RBA today set up for a rate cut on 7 May.

After thirteen months in a row where they cut and paste the following words:

the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.

they changed to:

the Board judged that it was appropriate to hold the stance of policy unchanged at this meeting. The Board will continue to monitor developments and set monetary policy to support sustainable growth in the economy and achieve the inflation target over time.

See the difference?

For the last thirteen meetings, they have said that policy is sufficient to hit their targets. Now policy will be set to make sure their targets are hit.

That’s a meaningful change. It is relevant that it occurred at the same time as they cut their domestic and global growth forecasts.

It isn’t a lock just now — more weak data is required to complete the case — but the option will certainly be discussed at the May meeting.

Forget the unemployment rate test everyone is talking about — a 0.4% on trimmed mean CPI on 24 April will lock in a 25bps cut on 7 May.


  1. hmm, a rate cut just before election day when it is still arguable.

    I very much doubt it. June is the pea me thinks

  2. It’s a good pick up, but that’s a very subtle change. Going back to Stevens’ statements prior to his 2015 and 2016 cuts, the hints were a lot stronger. Adding to your case, I thought the comment in the second para that “downside risks have increased” (albeit for the global rather than local economy) was significant.

    On the flip side, the statement comments that “The Australian labour market remains strong”, and the RBA expects both wages and inflation to pick up over time, with inflation heading into the target range next year. As I had suggested, Lowe appeared to flag that the RBA will look through a weak Q1 CPI.

    On balance, I still think Lowe is too attached to his Austrian views to wave the white flag so soon. I think he’ll want to see UnN rising. Anyway, we’ll find out in a month!

Comments are closed.